Corporate venturing – the term used for when established corporations collaborate with startups in an effort to boost innovation -- continues to emerge at speed. Well-known adopters now include AT&T, Schneider Electric, Intel, Qualcomm, Samsung, Henkel, Comcast, Wells Fargo and 3M. These major companies are now applying a variety of corporate-venturing mechanisms to this end, such as venture clients, venture builders, scouting missions, challenges prizes, corporate accelerators, to name a few.

But how much time, and how much money, does it take to integrate the value generated from corporate venturing into an established company? Which mechanisms are quickest? And the most cost-effective? How might costs be reduced, even while speeding things up? Answers to these questions can be hard to find because of the novelty of the corporate venturing trend.

To help fill this need, professor Mª Julia Prats and Josemaria Siota from IESE's Entrepreneurship and Innovation Center, together with Isabel Martinez-Monche and Yair Martínez from the consultancy firm BeRepublic, authored the 2019 report Open Innovation: Increasing Your Corporate Venturing Speed While Reducing the Cost. The report is based on interviews with more than 120 chief innovation officers (and those in similar roles) who are involved in corporate venturing activities in Asia, Europe and the United States.

The authors identify five common principles that help companies use corporate venturing to increase the speed of innovation, while still being cost-effective:

1. Share innovation costs between corporate, business and venturing units, what the report calls the ‘joint three pockets rule’. For instance, finance a proof-of-concept with a third of the budget from the corporate venturing team, a third from corporate headquarters and a third from a business unit. Then, in the decision-making process, involve a member from each axis. This can increase the overall budget for innovation and boost other business units' involvement in the projects.

2. Be skeptical about corporate incubators. Evaluate other mechanism that may give you more with less. For instance, the venture client entails around a sixth of the cost and a third of the time that corporate incubators require, on average.

3. Connect your corporate venturing initiatives by designing a holistic strategy and sharing that inside and outside your corporation. For instance, understand that the scout who identifies an opportunity may introduce it to the corporate accelerator, which may then lead to a corporate venture capital (CVC) investment, followed by an acquisition proposal. With a holistic strategy, redundancies can be decreased and more value can be generated.

5. Use data instead of relying on intuition or following media hype, when choosing the optimal combination of corporate venturing mechanisms and when identifying bottlenecks at the stage they occur, either during identification, collaboration or integration.

In short, the authors' conclusions aim to help leaders define their corporate venturing strategies with more precision and select the most appropriate combination of corporate venturing mechanisms. Additionally, the compiled data should provide innovation managers with benchmarks to see if they might be spending too much or advancing too slowly.

[This article has been reproduced with permission from IESE Business School. www.iese.edu/ Views expressed are personal.]